The trading contract: sales law, standard forms, documents and hedging

Swiss sales law and the Vienna Convention

When a Lugano trader contracts under Swiss law, two bodies of rules may apply. One is the domestic law of sale in Articles 184 ff. CO, the other the United Nations Convention on Contracts for the International Sale of Goods of 11 April 1980 (CISG), in force for Switzerland since 1 March 1991.¹ The CISG applies to contracts of sale of goods between parties whose places of business are in different Contracting States, or when the rules of private international law lead to the law of a Contracting State. Italy, Germany, France, the United States and China are Contracting States. Most international commodity sales concluded in Lugano therefore fall within the Convention's scope unless the parties exclude it. The Federal Supreme Court has held that a choice of "Swiss law" without further specification does not exclude the CISG, because the Convention forms part of Swiss law. An exclusion requires a clear expression of the parties' intention.² In a decision of 28 May 2019 the Court also held that, where the CISG applies, a buyer cannot avoid the contract for fundamental error under Article 24 CO on the ground of defects in the goods. The Convention's remedies for non-conformity are functionally equivalent and exhaustive.³ Traders often exclude the CISG by a clause such as "This contract shall be governed by Swiss law, excluding the United Nations Convention on Contracts for the International Sale of Goods". The reasons are partly familiarity, since lawyers and traders know the Code of Obligations better than the Convention, and partly substantive. The two regimes differ on the passing of risk, on the examination of goods and notice of defects and on the remedies for non-conformity.⁴ The domestic rule on risk is unusual. Under Article 185 paragraph 1 CO, benefit and risk pass to the buyer upon conclusion of the contract, unless special circumstances or agreements provide otherwise. The rule is almost always displaced in trading by an Incoterms clause, which fixes the passing of risk at shipment or delivery. Under Article 201 CO the buyer must examine the goods as soon as is customary in the ordinary course of business and notify defects immediately, failing which the goods are deemed accepted. The courts have interpreted "immediately" strictly, in some cases as a few days, while Article 39 CISG allows notice within a reasonable time. Actions for defects are time-barred two years after delivery under Article 210 CO.⁵

For a trader that buys and sells the same goods in back-to-back contracts, the choice between the CO and the CISG can create mismatches. Suppose the purchase is governed by the CISG and the sale by the CO with a strict notice period. The trader may then face a claim from its buyer after having lost its own claim against the seller, or the reverse. The safest practice is to use the same law and the same standard form on both sides of a chain, which the GAFTA and FOSFA forms achieve within their sectors. Where Swiss law is chosen, the contract should expressly regulate the time for inspection and notice and the method and place of sampling and analysis. It should also settle whether the certificate of an independent inspection company is final and limit liability for consequential loss.⁶

Notes

1. UNCITRAL, Status: United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980), https://uncitral.un.org/en/texts/salegoods/conventions/sale_of_goods/cisg/status (Switzerland: accession 21 February 1990, entry into force 1 March 1991); CISG, SR 0.221.211.1; Nicola Benz, "Look out: Your Swiss law contract may unwittingly be subject to Vienna Convention rules", MLL News, 5 March 2019, https://www.mll-news.com/look-out-your-swiss-law-contract-may-unwittingly-be-subject-to-vienna-convention-rules/?lang=en. ↩
2. Benz (above); Valentina Hirsiger and Lukas Innerebner (Baker McKenzie), "Switzerland: New landmark decision on the applicability of the CISG and its interaction with Swiss law in case of fundamental errors", Global Litigation News, 4 December 2019, https://globallitigationnews.bakermckenzie.com/2019/12/04/switzerland-new-landmark-decision-on-the-applicability-of-the-cisg-and-its-interaction-with-swiss-law-in-case-of-fundamental-errors/. ↩
3. Federal Supreme Court, decision 4A_543/2018 of 28 May 2019, as summarized by Hirsiger and Innerebner (above). ↩
4. Benz (above) (recommended exclusion clause). ↩
5. CO, Art. 185 para. 1, https://www.droit-bilingue.ch/en-de/2/22/220-185-198.html; Art. 201 paras 1–3, https://www.droit-bilingue.ch/en-de/2/22/220-201-215.html; Art. 210 para. 1 (two years after delivery, as amended by the Federal Act of 16 March 2012, in force since 1 January 2013), https://www.droit-bilingue.ch/en-de/2/22/220-210-224.html; CISG, Art. 39 para. 1 ("innerhalb einer angemessenen Frist"), https://www.droit-bilingue.ch/de-fr/0.2/0.22/0.221.211.1-39-42.html. ↩
6. Practice recommendation based on standard contract drafting in the trade. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.